Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 2.3% to close under $1,909 after the prospect of Democrat control of the Senate lifted bond yields and equities, undercutting demand for alternative assets. The metal had risen 3.1% over the previous two sessions, prompting traders to take profits.

Results from runoff elections in Georgia suggest that Democrats are on track to pick up two more seats in the Senate, thereby taking control of both chambers of Congress. With the government controlled by his party, President-elect Joe Biden's agenda has a greater chance of being enacted, which means sizable increases in spending on stimulus and infrastructure.

According to MarketWatch, economists estimate that an additional $1 trillion in stimulus will add around 2% to GDP over the next two years and push inflation above 2%

Long-term bond yields climbed sharply on rising inflation expectations, pushing the 10-year Treasury yield back above 1% for the first time since the pandemic began. Rising yields increase the opportunity costs for owning gold, which offers no yield, instead of bonds as a safe-haven asset.

In the longer term, rising inflation is typically bullish for gold in its traditional role as inflation hedge. And the continuation of easy money policies would further pressure the dollar, supporting gold and other commodities priced in it for global trade.

Equities rallied, with the Dow and S&P 500 adding 1.4% and 0.5%, respectively, while the Global Dow rose 2%.

The other precious metals were also lower, with silver dropping 2.2% while platinum and palladium slid 0.8% and 1.8%, respectively.

At the Comex close: February gold fell $45.80 to $1,908.60; March dropped 60 cents to $27.04; April platinum slid $9.40 to $1,110.20; and March palladium shed $55.30 to $2,448.10 an ounce.